The Bankwatch

Tracking the consumer evolution of financial services

Canadian markets exhibit ‘clog in the system’

In a follow up to this Fridays post on the sub-prime situation, it appears that certainly in Canada, the markets remain dysfunctional, as the impact of three record days of liquidity injection by the Bank of Canada, failed to create the desired result.

reportonbusiness.com: Third BOC injection in three days reveals ‘clog in the system’

The trickle-down effect does not seem to be functioning.

Banks are reluctant to lend to each other, and credit spreads are abnormally wide as a result, he said.

Relevance to Bankwatch:

Its clear that the Banks’ have a serious problem, and the degree of the problem will vary by institution.  Here we have the ideal opportunity for a Bank to take a lead and speak to people about the situation.  Clearly they are hoping that they can ‘ride this out’ and get past it, but the  facts suggest otherwise as we earlier reported on the large bulge of ARM resets still to hit. 

This is the ideal opportunity to engage in customer communication using social tools, such as blogs.  The conversation is already occurring as evidenced from this search.  Customers are not too nervous yet, but they will be as the effect filter through in lending restrictions.

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Written by Colin Henderson

October 1, 2007 at 21:51

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